Health Care

The Soft Underbelly of Obama­care

August 5, 2013

One of the challenges facing opponents of Obamacare has been that there is so much wrong with the law, it can be difficult to choose a single target to focus on. But as Yuval Levin and I explain in an article in The Weekly Standard, the individual mandate, one of law’s most important provisions is also one of its most problematic and unpopular.

The law’s champions have always considered the individual mandate to be the indispensable provision. It is what allows them to make the only boast they really care to make, which is that the law—in their estimation—will deliver on the long-sought goal of “universal coverage” (which now appears to mean covering all but 30 million people in our country). And it is what allows them to attempt to transform the purchase of government-sanctioned health insurance from just another consumer choice into a social obligation, if not a legal decree.

Of course, the mandate has already ceased to be the obligation that Obamacare’s architects wanted it to be. In his landmark ruling in NFIB v. Sebelius last summer, Chief Justice John Roberts found that Congress did not have the authority under the commerce clause to make the purchase of health insurance obligatory. The only way the “personal responsibility” requirement was found constitutional was as a tax on the uninsured: Citizens can either purchase insurance or pay that tax. Both options are perfectly permissible under the law. Indeed, the Roberts decision suggests that Congress could never raise the tax very much because that would tip the balance away from providing a genuine choice to imposing a de facto obligation to buy coverage.

The rest of the piece can be read online here.

posted by James C. Capretta | 10:23 am
Tags: Obamacare, individual mandate, Yuval Levin
File As: Health Care

The Significance of the Missing Employer Mandate

July 31, 2013

Apologists for Obamacare have been scrambling to defend the administration's decision to delay the implementation of the employer mandate by claiming that the mandate is not actually an important part of the law. But as I explain in a post at The Weekly Standard, delaying the mandate has serious implications for how much Obamacare will add to the federal deficit over the next ten years.

CBO’s estimates make clear how important the employer mandate is to Obamacare. Today, the agency provided updated projections of what the administration’s one-year delay (as well as related changes in the administrative process for adjudicating claims for federal subsidies) would mean for costs and coverage in coming years. CBO concluded that the administration’s decisions will increase the federal budget deficit over the coming decade by $12 billion. (Incidentally, the blog post from the Treasury Department announcing the mandate delay contained 478 words, so that’s about $25 million per word.) CBO also says the delay and related actions will mean one million people won’t get employer-sponsored health insurance in 2014, and about half of them will be left uninsured as a result. Even by Obamacare standards, these are not minor consequences unless one cares nothing about federal deficits or how many people don’t have health insurance.

You can read the rest of the post here.

posted by James C. Capretta | 11:55 am
Tags: Obamacare, employer mandate
File As: Health Care

Ways and Means Health Subcommittee Hearing: “The Obama Administration’s Delay of the Employer Mandate”

July 10, 2013

Today, the House Ways and Means Health Subcommittee held a hearing on the Obama administration’s decision to delay enforcement of the employer mandate, where I gave testimony on the implications of both the delay in the employer mandate as well as the administration’s recent decision to abandon income verification for applicants to state insurance exchanges.

The decisions to abandon the employer mandate for 2014 and to allow applicant attestations in some instances were announced only last week; it will take some additional time before the full implications are known and understood.  Nonetheless, in my testimony, I will provide some initial observations about what they mean for employers and the federal budget, and for broader implementation of the 2010 health care law.  I also offer my recommendations to the committee and to Congress regarding what I believe would be an appropriate legislative response to the administration’s recent announcements.

You can read the rest of my written remarks here, or watch video of the entire hearing here.

posted by James C. Capretta | 6:47 pm
Tags: Obamacare, employer mandate, exchanges
File As: Health Care

The Fiasco That Is Obamacare

July 9, 2013

Following close on last week’s announcement that the employer mandate provisions of Obamacare will be delayed by a year, the administration just announced another problem in the law’s implementation.

In a 606-page regulation, issued the Friday after July 4, the administration announced that income and employment verification in the state-run exchanges in 2014 will be based on the “honor system.”  That is, the state exchanges will not be required to secure independent verification of the household incomes of the applicants, nor will they have to track down whether or not applicants were offered qualified coverage by their employers. On both counts, the state exchanges can simply accept whatever is claimed by the applicants as accurate, and then pay out subsidies accordingly.

This announcement is another indicator—as if we needed one—of the complete fiasco that is Obamacare implementation.

You can read the rest of my post on the fiasco that is Obamacare on the Weekly Standard blog, and listen to this episode of the Weekly Standard podcast, where I spoke with Michael Graham about Obamacare’s sloppy and irresponsible implementation.

posted by James C. Capretta | 10:46 am
Tags: Obamacare, exchanges
File As: Health Care

The HHS Mandate Fraud Exposed

July 3, 2013

The Obama administration’s “HHS mandate”, which requires that all employers provide free contraception, sterilization procedures, and abortifacients in their health-insurance plans for their workers has met with stern resistance from both the religious employers who are forced to choose between obeying their consciences and the law under this mandate, and from defenders of religious liberty from all faiths. And as I explain in a column at National Review Online, the administration’s so-called “accommodation” for religious employers has never been anything but a fraud.

Of course, it was never going to be possible to square this circle; something would have to give. The administration could either do what previous administrations would have done, which is to recognize the importance of providing ample space for those with religious sensibilities to follow their consciences without running afoul of the government’s laws and regulations, or it could ignore our nation’s history of religious tolerance and impose an inviolate “right to contraception” on every employer, religious objections notwithstanding.

You can read the rest of the article here.

posted by James C. Capretta | 5:15 pm
Tags: HHS Mandate
File As: Health Care

The White House’s Peculiar Obamacare Delay

July 3, 2013

On Tuesday, the Obama administration announced that they would be delaying the implementation of the employer mandate provisions of Obamacare from 2014 to 2015. Over at the Weekly Standard, I explain how this strange decision highlights the underlying weaknesses of the entire health care law:

For starters, the delay confirms precisely what the critics have been saying all along: That Obamacare is a huge burden on the economy that will reduce employment and stifle wages. By delaying enforcement of the mandate, and citing complaints from employers as the reason, the Obama administration is essentially conceding this point. How do Democrats defend the law now that the administration has admitted it has the potential to harm business vitality and job growth?

The rest of the post can be read here.

posted by James C. Capretta | 12:08 pm
File As: Health Care

Covering Pre-Existing Conditions in a Market-Driven Health System

June 25, 2013

There has been considerable debate among conservative opponents of Obamacare over proposed federal legislation that would fund high-risk pools for people with expensive pre-existing health conditions. In a column at e21 I explain why and how the federal government should help protect people with pre-existing conditions by funding high-risk pools.

Some opponents of this legislation have in mind the possibility that the problem of pre-existing conditions can be resolved with deregulation and a more functioning marketplace for health insurance. And it is certainly true that the problem is caused — in part — by the favorable tax treatment granted to employer-paid insurance premiums. This encourages heavy reliance on job-based insurance that is not owned or controlled by the workers, and can’t be taken with them when they leave their jobs. The discontinuity in insurance coverage that therefore occurs in the United States compels a regulatory solution to ensure that workers who switch insurance do so without incurring significant financial risks. We would be far better off if the market for private health insurance had developed differently, with individuals purchasing and owning their coverage more, as they do with most other insurance products.

But there’s no sense in ignoring reality. Today, about 160 million Americans are enrolled in job-based insurance plans, and mainly they are satisfied with what they have. If Obamacare is repealed, there’s little prospect of wholesale change to this insurance system. Therefore, opponents of Obamacare need to promote solutions for pre-existing conditions that presume the continuation of job-based insurance as the dominant form of coverage.

You can read the rest of the column here.

posted by James C. Capretta | 12:31 pm
Tags: pre-existing conditions
File As: Health Care

Yes, Premiums Will Go Up

June 19, 2013

Obamacare apologists have been touting last month’s news from California about the effect that the law will have on insurance premiums, but, as I explain in a column on National Review Online, the law’s critics have been right to point out how Obamacare will increase rates in the individual insurance market.

Obamacare is imposing a minimum benefit for insurance that is in excess of what many consumers purchase on their own today. And the law is imposing many new rules on what insurance companies may and may not take into account when setting premiums. There is no experience anywhere indicating that these kinds of changes will lower premiums. And there’s an abundance of evidence from state experiments indicating that these changes will increase premiums, and probably quite substantially.

So Roy and the others were rightly suspicious of the spin coming out of California and decided to take a look themselves. What they found is that California officials were comparing the Obamacare exchange premiums with small-employer plans, not the existing individual market in the state. This was a completely inappropriate comparison. It is the enrollees in the individual-insurance market who will have little choice but to get their coverage from the exchange next year. Employees of small businesses can still get their insurance outside of the exchange, and do so on a self-insured basis to avoid getting pooled with insurance enrollees outside their firms. But for people in the individual market, there’s no getting around Obamacare.

You can read the rest of the piece here.

posted by James C. Capretta | 2:15 pm
Tags: Obamacare, insurance premiums
File As: Health Care

The 2013 Medicare Trustees’ Report

June 4, 2013

Last Friday, the Medicare trustees released their annual report on the state of Medicare’s finances. And, yesterday, the American Enterprise Institute held its annual event on the report, moderated by AEI’s Joe Antos.  The session always features a presentation on the report’s main findings by a representative from the office of the actuary that prepares the report. For many years, that task fell to long-serving chief actuary Richard Foster, but Mr. Foster retired earlier this year after a distinguished career. So, yesterday, Paul Spitalnic, the acting chief actuary for Medicare, performed the duty for the first time, and did so admirably.

The rest of the session featured comments on the state of health care costs and Medicare by Mark Pauly of the University of Pennsylvania, Chapin White of the Center for Studying Health System Change, and myself, followed by a question and answer session with the audience.

Video of the entire AEI event can be viewed here. In addition, the slides that I used for my presentation are available at the bottom of the same event page.

posted by James C. Capretta | 3:30 pm
Tags: Medicare, Medicare trustees
File As: Health Care

Obamacare and the New Medicare Trustees’ Report

June 3, 2013

The Medicare Trustees released their annual report on the state of the Medicare trust fund last Friday, and, not surprisingly, Obamacare supporters are already pointing to the report’s findings as evidence that the law is working. Such claims are nonsense, as I argue in a short post on National Review Online.

For starters, Medicare’s unfunded liability remains staggering — a full $43 trillion over the infinite horizon. That’s nearly $7 trillion more than the 2010 report.

Moreover, as was the case in every report from 2010 onward, Medicare’s actuaries have again told us that the real state of Medicare’s financial outlook is far worse than the official projections indicate. That’s because the cuts to Medicare contained in Obamacare are so irrational and blunt that they will almost certainly be reversed. Most especially, the actuaries expect the so-called “productivity improvement factor” will be reversed because of the damage it will do to access to care for seniors. That would be the provision in Obamacare that reduces the inflation update for most non-physician providers of services, especially hospitals. The cuts begin this year and continue every year, in perpetuity. If they are allowed to stand, they will push reimbursement rates for hospitals to levels that are so low they’ll fall below what Medicaid pays by the end of this decade. Medicaid’s rates, meanwhile, are so far below what private insurance pays that the network of hospitals willing to take large numbers of Medicaid patients is quite constrained. The actuaries expect that, by 2030, the cuts would push revenue for 25 percent of the nation’s hospitals below their total costs, leading many of them to withdraw from the Medicare program entirely.

You can read the rest of the post here.

posted by James C. Capretta | 12:06 pm
Tags: Medicare Trustees, Obamacare
File As: Health Care

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